Palm Valley Capital Management, an investment management firm, released the “Palm Valley Capital Fund” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. In the fourth quarter, Palm Valley Capital Fund declined -0.09% outperforming the -0.58% decline in the S&P SmallCap 600 and slightly underperforming the 0.32% gain in the Morningstar Small Cap Total Return Index. The Fund faced losses on certain equity positions, but these were partly balanced out by gains from Treasury bill holdings. During the quarter the equity positions in the Fund reduced by 3.6%. Cash equivalents comprised 78% of the fund’s assets at the period’s end. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Palm Valley Capital Fund highlighted stocks like Carter’s, Inc. (NYSE:CRI), in the fourth quarter 2024 investor letter. Carter’s, Inc. (NYSE:CRI) designs, sources, and markets branded childrenswear. The one-month return of Carter’s, Inc. (NYSE:CRI) was -0.31%, and its shares lost 26.64% of their value over the last 52 weeks. On January 6, 2025, Carter’s, Inc. (NYSE:CRI) stock closed at $55.09 per share with a market capitalization of $1.985 billion.
Palm Valley Capital Fund stated the following regarding Carter’s, Inc. (NYSE:CRI) in its Q4 2024 investor letter:
“The three positions contributing most negatively to the Fund’s fourth quarter return were the Sprott Physical Silver Trust (ticker: PSLV), ManpowerGroup (ticker: MAN), and Carter’s, Inc. (NYSE:CRI). Carter’s stock declined during the quarter even after posting stronger than expected operating results. While Carter’s retail business showed signs of improvement last quarter, sales remained under pressure. Management believes inflation has reduced young parents’ discretionary income and ability to spend on children’s clothing. Carter’s has responded by lowering prices at its stores, which has turned volumes positive but reduced profit margins. While the company maintained its profit guidance for the year, margins will likely remain below average given weak consumer spending and higher promotions. We do not expect business conditions to improve in the near term, but we believe Carter’s depressed stock is trading at an attractive discount to our calculated valuation. The shares are priced at 11x 2024 estimated earnings and offer a 5.9% dividend yield.”
A colorful assortment of children’s apparel with different themes, capturing the dynamism of the business.
Carter’s, Inc. (NYSE:CRI) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 30 hedge fund portfolios held Carter’s, Inc. (NYSE:CRI) at the end of the third quarter which was 28 in the previous quarter. Carter’s, Inc. (NYSE:CRI) reported net sales of $758 million for the quarter, reflecting a 4% decrease compared to the previous year. While we acknowledge the potential of Carter’s, Inc. (NYSE:CRI) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Carter’s, Inc. (NYSE:CRI) and shared Aristotle Small Cap Equity Strategy’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.